Olympics brand police - how companies are challenging the limits

A crackdown by 'logo police' on brands being linked to the Olympics without official sponsorship rights have been accused of "lunacy" for ordering shops to remove sausages, flowers and bagels shaped as the Olympic rings.

Some food stalls in the Olympics village are selling chocolate, chewing gum and savoury snacks from under the counter as they cannot display items not produced by key sponsors. However, as always, satire is proving to be one of the unintended consequences of the ban.

• Glasses company Specsavers used a diplomatic blunder by Olympic staff mixing up the North and South Korean flags at a football game to design an ad written partly in Korean with the two flags and a strapline: "Should have gone to Specsavers"
• Oddbins, has offered 30 percent discount to customers with a list of items of non-Olympics sponsors such as Nike trainers, Vauxhall car keys, an RBS MasterCard, an iPhone, a bill from British Gas and a receipt for a Pepsi bought at KFC..
• Bookmaker Paddy Power was told to remove posters advertising its official sponsorship of the "largest athletics event in London this year", referring to an egg and spoon race in London in Savigny-sur-Seille, France. LOCOG backed down and the posters are still up

Have an anarchically Olympian weekend, from the NamNews Team!
...ideally in the  "Capital of England during the Sport Matches that Occur Every Four Years during the Southern Hemisphere Winter, Which Happens to Be in This Year We Are in Now"
OK LOCOG?   (source: Gawker.com)

Tesco's credit rating – what it means for you?

Yesterday’s warning by Standard & Poor that ongoing pressure from intensifying competition, weak consumer spending and lower profits could trigger a downgrade to its risk profile and credit rating should not be seen as another nail in the Tesco coffin.

Tesco's previous ratings
In fact, regular readers will know that Tesco have been here before (Moody’s in April 2012, and May 2009). It also helps to bear in mind that the credit rating represents the credit rating agency's evaluation of qualitative and quantitative information for a company or government; including non-public information obtained by the credit rating agencies analysts. Yesterday’s announcement referred to a long term (i.e. after a year) rating, making it more expensive to borrow, but no issues in the short term.

Why the rating matters to you
However, the mention of  ‘lower profits’ as a cause, means that Tesco is effectively prevented from drawing heavily on current profitability to fund its £1bn revitalising initiative, or indeed any ‘nuclear pricing’ options (see KamBlog).

What Tesco needs to do
Apart from a need to make "targeted" disposals, cutting back capital expenditure and/or shareholder pay-outs as possible options, the ratings threat means that Tesco will be forced to place more emphasis on internal savings….
As you know, for a retailer these can include a combination of cost-price reductions, optimising of credit terms/settlement discount trade-offs, increased trade funding, strict application of deductions and improved service levels…

This means it is perhaps time to re-evaluate your position on each of these elements of your Tesco trading relationship, as a basis for determining your fair share of any help Tesco may require in funding its strategy.

Deriving your bespoke rating of the customer:
Finally, a ratings agency score can be a fairly blunt instrument from a NAM’s point of view. Better for you to derive a bespoke rating via a combination of analysis of the customer’s ROCE, Net Margin, Stockturn and Gearing, overlaid against your terms, trade-funding and service level, in order to establish and demonstrate your fair share of any remedial action…

Not doing so can represent more risk than you need, in the current climate.

Delegating NAM responsibility?

                                                                                                                     pic: BBC
Westfield Stratford shopping centre was displaying huge banners welcoming visitors from all over the world for the Olympics. The Council for Arab-British Understanding (Caabu) said the words were back to front and not joined up as they must be in Arabic.

The rail firm First Capital Connect made the same mistake when it sent posters to 13 stations printed in English and seven other languages intended to warn people not to leave items unattended.

Delegating to machine translation...
Luckily the computer-produced Arabic message was incomprehensible rather than rude but it does illustrate the problem of having to retain responsibility for the downside when delegation goes wrong, especially when the delegator is busy with the next fire…

NAM: Responsibility without Authority
Despite the progress in terms of tools and process, the NAM role still works best by taking full responsibility with very little designated authority...
While others await the completion of the definitive organisation chart and job description that acknowledge the status of Account Management, pro-active NAMs know that the job thrives on loose definition, with all necessary authority coming from a clear Account Strategy, agreed by CEO, and truck driver...

How it works in practice
This ‘job-box without walls’ allows the NAM to move persuasively at all levels, co-ordinating all key functions in both their own organisation and that of the customer.
Having to act without designated authority, the NAM is forced to use persuasion, in turn based on understanding, identifying and satisfying the job needs of each job-holder, and representing all desired output in terms of that colleague’s role optimisation, with unselfish allocation of genuine praise and credit.
This can be very frustrating for some NAMs given that ‘we are all working for the same xx company’, with the loosely defined NAM taking full overall responsibility for all to do with the customer, while colleagues apparently work within the comfort of their own clearly defined 9-5 boxes, especially in these unprecedented times....

Need a way out?
If this all becomes all too much, the frustrated NAM should try to squeeze in evening classes in Production, Finance or Marketing and transfer into one of these ‘safer’ jobs...
Meanwhile, pro-active NAMs who persist 24/7 in the ‘responsibility without authority’ route often find a soul-mate, not within their own company but rather in the role of the buyer, who in practice works in a mirror-image of the NAM role…

So perhaps some evening classes in buying might help?   

Tesco's nuclear price option, if all else fails...

How to prepare for the inevitable?

No one, including Tesco, can say exactly what will happen, but it would be reckless of any stakeholder not to attempt to shorten the odds by eliminating  or factoring in some of the ‘obvious’ variables in the meantime…

The company patently has deeper pockets and greater scale-advantages than other players, but any positive momentum has to be sustainable in the long term, in order to avoid wasting gains made here and abroad over the past 20 years.

1. Share-price maintenance: As you know, Tesco’s share price has still not budged since its 20% drop following the January profit warning.  Any share price improvement will still be driven by ROCE performance, in turn driven by Net Profit on Sales, and Capital Turn, so these ratios cannot be allowed to be diluted, even in the short term i.e. this will require a combination of cost-price reductions, optimising of credit terms/settlement discount trade-offs, increased trade funding, strict application of deductions and improved service levels…

2. Deep-cut pricing: in order to sustain its current marketing approach aimed at retrieving lapsed shoppers, any price changes have to be credible and sustainable – cosmetic  cutting of a handful of KVIs will be insufficient. The ‘typical ‘shopping basket will obviously have to be cut sufficiently to attract the attention of a savvy shopper, not just the media. However, to maintain any shopper ‘regains’ the company will have to make across-the-board cuts permanent and sustainable, in order to avoid unnecessary de-stabilising of strategies currently in place.

3. Brand–Own label balance: this may be allowed to shift a little from its current 50/50 to perhaps 45/55 in acknowledgement of not only the credibility of the Tesco brand, but also the own-label pull of unprecedented market-change. It will not be allowed or encouraged  to move to levels of 65/35, if the company has learned anything from its last 30 years in the UK market…

4. UK/Rest-of-world balance: The UK as a feeder for o/seas development? NB. Like any globally-ambitious retailer, Tesco needs the security and cashflow of home market dominance in order to drive rest-of-world growth.

5. Market share: Here Tesco has three options, recovery of lost share, stop the current loss of share, i.e. maintain market share at current level, or allow market share to drift down to 25%, thereby removing it from the ‘kicking–post’ role in terms of being a political scapegoat, and a target for grievances of special interest groups. Of these, we believe the more likely will be the ‘maintain current share’ option, then using internal efficiencies to drive profit improvement...

6. Food/non-food balance: who knows, but the fact remains that Tesco's approach to non-foods reflects many of the advantages of being able to apply fmcg food principles to categories that were hitherto regarded as requiring ‘special ‘ treatment  because of tradition routing to consumer.

7. Online/ traditional retailing: Any marketing instinct would cause Tesco to follow natural development of a market, online being no exception…


Supplier action:

In the meantime, suppliers need to be clear about their own limits in terms of willingness to fund what happens. Suppliers also need to take advantage of Tesco’s temporary ‘weakness’ by insisting on a fair-share, pro rata  stance in return for any help given.

Use of a Buying Mix analysis will help in assessing Tesco’s pulling power vs. alternatives available (JS, Asda, Morrisons, Waitrose, the Co-op and ‘all others’ ) based on the retailing 8P marketing mix, all seen from the point-of-view of lapsed customers. It is also important that Tesco and its suppliers do not forget the current customers, those most vulnerable to any neglect in terms of being susceptible to the appeal of the opposition….

Developing an ‘obvious‘ context using the above factors, but fine-tuned to their specific categories, suppliers (and retail competitors) should then devote the remaining weeks/months to monitoring and modifying  the above factors/variables to incorporate latest data, before retiring to the fall-out shelter…

Moving away without giving up?

Coping with the Olympics via a pop-up shop has been an escape route to new business for bespoke tailors, Apsley of Pall Mall who have taken over suites at the Edinburgh Caledonian Hilton to attract new customers to the world of bespoke tailoring (makers of a top-end suit at £70k and a more moderate range at £900/suit, clients include  Fulham and West Ham football clubs).

The 120-year-old firm’s fitting rooms are located behind the Olympic beach volleyball security cordons at Horse Guards, and it being no contest, they have sent their four tailors to Scotland.

Running the numbers: At 20 customers /day for August, at £900/suit, realising £360k, less costs, should suit nicely, thank you…and not counting customer lifetime value..

Thanks to Anne Johnstone for the link

Raising the bar via London’s largest pop-up shop?

                                                                                               pic: popupspace blog

Those accustomed to regarding pop-up shops as temporary ad hoc initiatives, and willing to brave the Olympics access restrictions, might be surprised to find retailers like Chanel, Laithwaites Wine, H&M, Liberty, and Tesco combining their Olympics presence with an opportunity to sell, via pop-up outlets…

Alternatively...
For those who cannot make it, a good second best might be to visit London’s largest pop-up shop in Hyde Park. This 12,000 sq ft pop-up shop on Rotten Row is the only location fans can purchase official London Olympic 2012 venue merchandise outside of Olympic Park, and will receive special visits from athletes throughout the games. It offers something for everybody at every price point – from one-off exclusive collectables to children’s toys….

Time to consider the appointment of a pop-up KAM, a temporary role obviously…?
Incidentally, to keep up with pop-ups, visit the popupspace blog.

Need your Amazon delivery yesterday?

With Amazon's increasingly accurate profiling, coupled with its move to same day delivery, how far are they away from being able to so predict your needs and ability-to-pay that they can anticipate your requirement and ship the day before you order…?
With a no-questions-asked returns policy, who cares if they (or you!) get it wrong sometimes?
The ultimate in permission marketing?

Fussy about surrendering so much to a retailer?
Then how about using your favourite grocer as a source for all your groceries (from womb to tomb) and non-food; buying, paying for and insuring your house, undergoing health-checks and sourcing prescriptions, collecting and spending the points, and availing of some cash-back at the checkout?

In fact, just steps away from arranging for your salary to be paid directly to the retailer’s new bank to fulfil all your spending needs…savvy?

Underestimating Amazon?  

Pop-up Britain, an answer for UK High Streets?

                                                                                         pic: Business Matters Magazine

StartUp Britain has today opened the first of its revolutionary PopUp Britain shops, offering start-up businesses a unique low-cost opportunity to experience life on the high street.

This unprecedented scheme will help to revive the UK’s flagging high street by making use of co-funded empty shops. StartUpBritain’s first PopUp, opposite Richmond station, will provide retail space for six start-up businesses. The store will get backing from the scheme's sponsors: John Lewis will fit-out the shop, the businesses will be insured by AXA. Each business will also get a Dell laptop, access to PayPal's online internet payment system and a copy of Intuit's Quickbooks accounting software.
StartUp Britain was founded 15 months ago by a group of eight entrepreneurs to encourage small business startups, winning support from government. However they rely for funding from the private sector via sponsorship.

A great idea in unprecedented times, but as David Prosser in the Independent notes, ‘if the state is going to leave it to volunteers to deliver its stated desire of boosting entrepreneurialism, it must at least have the decency to get out of the way. If local authorities play ball, and the scheme gets a fair wind from other public-sector bodies, StartUp High Street is an idea which might just make a real difference. For example, local authorities will need to be supportive about allowing these retailers to trade — waiving planning permission restrictions, say’.